What Budget 2026 can do to unlock agriculture carbon credits for farmers

The Federal spoke to Grow Indigo's Executive Director Usha Barwale Zehr and COO Umang Agarwal about India’s first high-integrity soil carbon credit issuance and how regenerative agriculture can generate new income for farmers while improving soil health and climate outcomes.

The executives outlined how the Adi project achieved a major milestone under Verra’s VM0042 methodology and what it means for the agricultural carbon credit market in India. Speaking about Budget expectations, they said voluntary carbon markets could act as a sandbox for real policy.

What Grow Indigo does

Agri-tech venture Grow Indigo specialises in regenerative agricultural practices aimed at generating carbon credits and enhancing sustainability on Indian farms. Zehr said the company focuses on two main activities: carbon and biological agricultural inputs, both of which have already demonstrated value on the farm.

She said the company reached a significant milestone in its carbon programme, which creates a credible income stream linked to healthier soils and climate action.

Grow Indigo’s Adi project has achieved issuance of high-integrity soil carbon credits under the stringent Verra VM0042 methodology after a long audit and review cycle. (Verra is a global non-profit that develops and manages standards for sustainable development, climate action, and responsible business practices.)

The first issuance under this methodology represents what the company described as a “revolutionary moment for Indian farmers,” adding verified climate outcomes to farm economics.

Zehr noted that credits are generated when greenhouse gas reductions occur, but issuance occurs only after a rigorous third-party audit and registry review process. She explained that the monitoring period for the current issuance ran from 2019 to 2022, with the issuance finally taking place in 2026 after multiple cycles of review.

The audit included remote sensing algorithms, crop simulation models, farmer stakeholder meetings, and legal reviews to verify additionality and regulatory surplus—ensuring credibility at every step.

This release of credits is tied to a project known as Adi, which means “first” in Indian languages, marking India’s first VM0042 soil carbon project.

Project details

Zehr said the Adi project is registered on the Verra registry, one of the largest global registries for voluntary carbon credits. It supports smallholder farmers to adopt regenerative practices that improve soil health and transition from transplanted rice to direct-seeded rice, improving water outcomes and reducing emissions.

The first issuance covers over 50,000 carbon credits from around 30,000 acres in Punjab and Haryana, and Grow Indigo’s broader footprint already spans over one million acres with thousands of participating farmers.

These credits can be monetised on carbon markets, with a typical price range seen globally of $40 to $60 per credit, though India does not yet have a domestic benchmark.

Zehr said each credit represents one tonne of carbon captured or emissions reduced, and the project’s first issuance is expected to generate payments for participating farmers. She said farmers could expect about 10 credits each for the three-year monitoring period, which may translate into a payment range of ₹15,000 to ₹50,000 per farmer depending on market prices.

Zehr emphasised that the project’s verification under Verra’s rigorous methodology demonstrates that India can deliver high-integrity soil carbon credits at scale.

Regenerative practices

Zehr further outlined the core regenerative practices promoted by Grow Indigo under the Adi project.

In rice cultivation, farmers are encouraged to shift from transplanted rice to direct-seeded rice, which reduces water use and methane emissions.

For the following crop, typically wheat, the project promotes reduced tillage systems, which support both carbon removal and emissions reduction.

She said the objective is to increase the “effect size” by including additional regenerative practices that further enhance soil health and create more opportunities for carbon credits.

Agarwal said the price of carbon credits will only be clear after they are sold in the market once issuance is completed. He reiterated that Grow Indigo’s commitment is to ensure that the majority of the benefit from carbon credit revenue flows directly to the farmers.

Agarwal said the goal is to “get the best possible value for the carbon credit so the farmer receives the maximum possible income.”

Why the milestone matters

Agarwal described the issuance of soil carbon credits under Verra’s VM0042 methodology as a milestone because it demonstrates that India can lead on high-integrity agriculture climate solutions.

He said this is the first such issuance in India’s agricultural carbon markets with a rigorous audit review and methodology, supporting both soil health and climate resilience while generating a new stream of income for rural livelihoods.

Agarwal also noted that the belief that smallholder farmers could not participate in carbon markets is being challenged by this development.

Technology and scale

Grow Indigo uses a combination of field verification and advanced technology to document practices, with field agents collecting data and remote sensing and satellite imagery used to independently verify compliance before third-party review.

Agarwal said that at scale, technology becomes essential for verification, especially given Grow Indigo’s engagement with about 1 million acres and 100,000 farmers in Punjab and Haryana alone.

He said the first issuance was for early mover farmers who joined the project before 2022, and that the broader programme spans about 2 million acres and 200,000 farmers across India.

Policy and budget expectations

Agarwal discussed expectations from the upcoming Union budget, suggesting voluntary carbon markets can act as a sandbox for real policy.

He said the success of the Adi project can serve as a case study for India’s formal carbon market, expected to launch in 2026, where agricultural soil carbon credits could be included as part of the Carbon Credit Trading Scheme (CCTS).

Zehr added that the Budget should give due consideration to smallholder farmers’ participation in carbon markets and support infrastructure such as machinery, which is already being partially addressed.

Natural farming

Zehr said natural farming is a broad subject, and when discussing regenerative agriculture, the focus should be on nature-based solutions that sustain productivity and build soil health.

She noted that biological inputs used by Grow Indigo have synergy with carbon programmes, improving soil health and potentially increasing carbon revenues.

Zehr further emphasised the need to focus on solutions that build soil health at the farm level rather than broad categories like zero budget natural farming. She addressed a question about potential contradictions between leaving straw and stubble on fields to build soil carbon and alternative uses such as bio-CNG production.

She said part of the straw can remain on the field and part can be used elsewhere; the balance will affect biomass calculations and soil health impact, which feeds into the carbon programme.

Regarding water use, she said direct-seeded rice offers convenience and reduced labour, and farmers are increasingly aware of the community benefits of saving water.

Global carbon markets

Agarwal said global carbon markets are resilient, even as rules continue to evolve since the Paris Agreement and the recent implementation of Article 6.

He said more carbon markets, including India’s, will take shape in the coming years.

Zehr added that global political discussions create uncertainty, but positive signs show many players remain committed to carbon goals.

India’s climate leadership

Agarwal said the Adi project’s rigorous process and farmer-focused outcomes show how India can set a benchmark for climate action at the smallholder scale, generating measurable outcomes and value flowing back to farmers.

He said focusing on smallholder livelihoods is crucial for India, where the majority of agriculture depends on small farms.

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